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09-18-1986 - Workshop .~ \,. CJ o CITY COUNCIL OF EDGEWATER WORKSHOP SEPTEMBER 18, 1986 MINUTES Vice Mayor Neil Asting called the Workshop to order at 3:00 P.M. in the Community Center. He stated the purpose for the Workshop was to discuss institution of the self-insurance program. ROLL CALL Mayor Earl Baugh Councilman Louis Rotundo Councilman Russell Prater Councilman Neil Asting Excused Present Present Present Councilman James Inman City Attorney Jose'Alvarez City Clerk Connie Martinez Chief Lawrence Schumaker Deputy City Clerk Susan Wadsworth Present Arrived Later Excused Present Present Also present was Mr. Gary Schad, the City's insurance carrier from Town & Country Insurance Agency. Vice Mayor Asting excused Chief Schumaker at this time. Vice Mayor Asting requested a motion to recess the workshop until the City Attorney arrives. Councilman Rotundo so moved. Councilman Inman seconded the motion. Motion CARRIED 4-0. City Attorney Alvarez arrived at 3:12 P.M. Vice-Mayor Asting called the Workshop back to order at 3:15 P.M. and he turned it over to City Attorney Alvarez to advise Council of the self-insurance program. City Attorney Alvarez stated there's a draft of the ordinance that will put the program into effect and also attached are forms for handling of claims and the procedures. He pointed out that keeping down accidents is the primary objective. He said Council will receive evaluation reports, either quarterly, every six months, or yearly, which will show the number of accidents, the status of the claims, what has been paid, and amount of reserves which is put aside for what they think it will cost. He reviewed the various forms in the packet and their possible uses for our City. He pointed out the importance of having an immediate report of an accident and the investigation to determine damages and liability. He noted the next step would be a formal evaluation by the insurance committee to determine if it's a valid claim that should be settled early or if it should be denied and then litigate it if challenged. He noted it's an important decision that will set the trend and determine if there's litigation or settlement. He stated that if they decide to settle on a claim and the amount is over $1,000, then it comes to Council with factual memos that explain how the accident happened, the recommendation, and the amount of payment established. He pointed out the memo has to be carefully done regarding liability, and they can't alert the individuals that perhaps they could get an idea they could get more money. He stated the attitude of getting tough on all claims doesn't payoff in the end because if you're liable and someone gets hurt and there's a litigation claim with an attorney involved, the City will pay more. He pointed out they should identify it real early to get rid of it before it goes to something bigger. He added that they want to get a reputation of fairness, but they won't pay just for the sake of paying. City Attorney Alvarez noted the insurance carrier will pay $5,000 for anyone only because to litigate will cost up to $10,000 so it's financially feasible. He said they have nuisance money but the City can't afford to do that. He pointed out that after they take a few through the process, the reputation will get around that Edgewater won't pay unless they really deserve it. He noted that sometimes they're only partially at fault and they pay too early so money could be saved at times by waiting and taking the lawsuit. He stressed that the first year is critical with this program and the employees have to be very conscious of what we're doing. , o o Self-insurance program review (Continued) - City Attorney Alvarez stated that the City Administrator will have to get on with the program in all departments, with visitations and getting analyses of all departments to see where the problems are. He pointed out that accidents such as the one on July 4th, where the public is involved, are the worst. Mr. Schad pointed out exposure is why it's impossible to get insurance for that type of event. City Attorney Alvarez continued with his review of the forms and reports of the type the Council will receive. He noted they'll have the total number of accidents per month and a breakdown by department which is how they'll be able to identify where the problem departments are. He noted there will be claims opened, research done, and then closed without payment. He reviewed the various claims paid on the forms provided. He then reviewed how and why the reserve is set up, noting that the money is in the bank earning interest. Councilman Rotundo asked if they replenish the amount spent at the end of the year and City Attorney Alvarez replied yes, because you have to assume a constant there. Mr. Schad suggested they try to build up the fund until it reaches $1,000,000. and he pointed out some cities take the annual premium from an. insurance company and put it in the fund each year thereafter. Councilman Rotundo asked if they should put $300,000 aside each year and Mr. Schad replied it could be whatever the premium would be. City Attorney Alvarez noted that each year the premiums will increase. Councilman Prater pointed out they'll be earning interest all this time. Mr. Schad agreed and noted that's where insurance companies make their money. Mr. Schad added that we've had no major claims but they have to be prepared and have the reserve there, plus the first year they don't have a large amount in there so it's very critical. Mr. Schad pointed out the City of Ormond Beach started six years ago with a fund for workers' compensation and they've saved enough money to build their new City Hall by not paying premiums, and they're not putting anything into the fund because they feel they have a comfortable cushion. City Attorney Alvarez noted it's not like an impact fee as a restricted fund and in an emergency they can borrow from that fund. He added that it's a contingency fund with premiums that would have otherwise gone to the insurance company. He noted that the School Board is self-insured. He said they have to consider if a club or organization is asked to provide an insurance policy and they balk. Mr. Schad noted that Daytona Beach's risk manager has a rule that if they're making money on what they're doing, then they have to supply them with a certificate of insurance. He added that they have to be tough and there have to be a lot of no's to protect the City. Councilman Prater noted that a lot of social clubs rent this out and the City is accepting the responsibility. City Attorney Alvarez noted that the insurance committee manages the fund and the requests go to that committee and they can say no. He added that it's not a legislative question, but an administrative procedure. Councilman Rotundo asked if they'll have to school the Police Department on the way to protect us for accidents. City Attorney Alvarez replied those on duty will have to be trained in the reporting process. He reviewed that each department should have a key individual with an adjuster in City Hall, an investigator who will respond to every accident with photographs, statements from witnesses, etc. He noted that the ivnestigator will want witnesses favorable to our situation who can be used in defense of the City. He added that it has to be done immediately because you can't find evidence later, and the person preparing the report has to be certain that he actually saw the accident as it was stated. He pointed out that the City isn't liable if vandalism is involved and they don't know about it, but they need routine inspections of City property. -2- Council Workshop Minutes September 18, 1986 . , , o o Self-insurance program review (Continued) - Councilman Inman stated they need to continue with the safety program and get the information to all employees that if they see a discrepancy or if something needs to be repaired there should be a form to turn it over to the designated safety employee in that department. He suggested employees who drive vehicles could have a defensive driving course. He noted that the course is expensive and you have to be certified to teach it. City Attorney Alvarez agreed we should get it. Councilman Inman noted that it came with workbooks and a movie. Vice~Mayor Asting stated this has to be passed on to department heads and they have to give a course of instruction to their employees. Councilman Prater suggested the department heads meet once a month the first year. Councilman Rotundo noted they meet every two weeks now. Mr. Schad stated they need a safety committee and each department head should be on it and then everything has to be brought up on a continual basis. Vice Mayor Asting stated the safety committee should be set up and the department heads appointed. Mr. Schad suggested they consider awards or other incentives for safety. Vice Mayor Asting stated they need, someone to administer over all of it, such as City Clerk Martinez, and then a safety committee made up of depart- ment heads and they would be responsible for filtering information down to the employees, especially the supervisors. Councilman Inman stated that quarterly reports are also important for the safety committee to review where the accidents are, and to determine how to prevent them happening again. City Attorney Alvarez pointed out they have a self-insurance administrator, a self-insurance committee, and a safety committee. He said under self- insurance is claims and litigation and under the safety committee is prevention. He added that the self-insurance administrator would be on the self-insurance committee and it could be the City Clerk, the City Attorney, and the insurance agent. Vice Mayor Asting asked who would be responsible for looking at a damaged vehicle and City Attorney Alvarez replied the claims. Councilman Inman stressed that it's vital the claims committee submit the report to the safety committee and City Attorney Alvarez agreed. Vice Mayor Asting noted it's self-insurance for personal injury and liability and asked if the insurance company comes in for property damage. Mr. Schad said they can self-insure everything but the general consensus is they self- insure buildings and automobile liabiltity. Vice~Mayor Asting asked if someone gets hurt in the Community Center if that comes under self-insurance and Mr. Schad replied yes. City Attorney Alvarez explained there's property damage that we insure and property damage that we cause to someone else. There was further discussion about what category the possible accidents would fall under. Vice Mayor Asting asked if the out of court cases would be covered by the insurance carrier and Mr. Schad replied yes, and he recommended a high deductible such as $1,000 or $5,000 and handle it here. City Attorney Alvarez noted that if they have a $10,000 deductible, the self-insurance fund would cover it and the major losses would go to the insurance carrier. There was a discussion about vehicles involved in an accident when no fault is involved. Councilman Rotundo asked about when firemen chop holes in a house when fighting a fire and the owner sues the City. Mr. Schad replied that's the property damage liability under the self-insurance fund. City Attorney Alvarez explained they'll pay if they're liable, and this happens a lot. He then expressed his concern with volunteer fire fighters speeding off in their own cars to a fire. Mr. Schad pointed out that emergency vehicles are not supposed to go over 10 miles per hour over the posted speed limit. City Attorney Alvarez clarified that it's not an emergency vehicle, but a private car. Councilman Prater asked if they're insured in their private car regardless of their private insurance. City Attorney Alvarez said they need to look at it because they may want to buy insurance for them and also they need to look at their procedures for their responses. Mr. Schad stated that probably the personal automobile policy won't cover responding as a volunteer. City Attorney Alvarez said they'll be paying high premiums if it covers emergency responses. Mr. Schad said he'll check this, but they have to be well trained. There was further discussion about the fire fighters' procedures for response now. City Attorney Alvarez again stated they need a procedure for the responses. -3- Council Workshop Minutes September 18, 1986 . . . o o .... Self-insurance program review (Continued) - Councilman Rotundo agreed they need to get the response procedure straightened out and Vice Mayor Asting agreed they need to get it established. Councilman Rotundo asked if the money comes out of self-insured if a Police car is wrecked and has to be replaced and City Attorney Alvarez replied yes, as the property damage aspect. City Attorney Alvarez noted it's tough to tell volunteers to follow a certain procedure. Mr. Schad suggested they tell them to procure their own insurance. City Attorney Alvarez reviewed the wanton, wilful and reckless conduct section in the Statutes, noting that if individuals act in this manner, they are not entitled to defense, and if they're hit with punitive damages, the City cannot pay it. He added that it's taxpayers' money and there's a public trust to administer, so to pay to defend this conduct is wrong. City Attorney Alvarez then reviewed the forms further, clarifying what the different amounts were. Vice Mayor Asting asked if our workers' compensation is high and Mr. Schad explained he's not the agent for that and they're assuming a risk the insurance company had before. Mr. Schad reviewed how the City of Ormond Beach handles their workers compensation claims with their own City doctor and hospital, thus giving them tight control. He added that before an employee is hired, there's a record from the State for $4.00 for former claims. Mr. Schad then reviewed the pending claims with the City, noting the amount of premium paid for the policy, and then the claims against it. Mr. Schad also passed out the sheets on the vehicles, with a discussion following about some of the items listed. Mr. Schad noted the small paid out amounts compared to the premiums for most of the years. Councilman Rotundo suggested they have a quarterly Council meeting to get the information and City Attorney Alvarez suggested it be monthly. City Attorney Alvarez noted there will be a lot of hours needed to set up the program and it will cost about $50,000 to set it up. Mr. Schad agreed it usually takes $35,000 to $50,000 and some people don't do it because of the cost to administer it, especially in the first year. Councilman Rotundo asked if the insurance agent can be paid a retainer to set this up and City Attorney Alvarez replied that the proposed ordinance states the agent of record and he hopes Gary Schad will be it, and City Clerk Martinez and himself. He added that they discussed the compensation and hours are almost impossible to determine. He noted that figures have to be put together and then go to the departments for training and safety and procedures to be set up. Mr. Schad pointed out they need someone to go to the classes to find out what's occurring on a continual basis. City Attorney Alvarez continued that they need to meet with the departments and set up procedures for the Fire Department and under what conditions they cover employees and when not to cover them plus a policy for use of City vehicles. There was a discussion about the fire fighters who don't go along with procedure. Mr. Schad referred to when one person has more than two violations in a three-year period, he has to be placed in a non-driving situation. Councilman Rotundo asked how they'd handle it if it's their own vehicle and Mr. Schad replied they can be told you don't want them to drive because the City can't assume responsibility. City Attorney Alvarez noted that the insurance company will pay sometimes when liability and workers' compensation is the same. Mr. Schad pointed out you can get them to the doctor right away and there's a report due within 7 days and it's all outlined for procedures. He added the workers' compensation fund is the easiest to anticipate and control. He suggested it be considered for self-insurance also. Councilman Rotundo asked the deadline and Mr. Schad replied October 1st. City Attorney Alvarez explained that once the program gets under way, there will be a lot of meetings and preparation but they have to adopt an ordinance. He noted that he'll see the Mayor at the Florida League of Cities meeting and get his thoughts. He noted they have to pass the ordinance, set the compensation of the self-insurance committee, which is administration of the claims and claims settlements, and the City Administrator will be in charge of the safety committee. He said they can put this in the hands of a consultant and pay $50,000, but because of the size of the City and loss experience, he feels they can handle it. Councilman Inman asked if they still have a safety committee and Councilman Rotundo replied it's more active than before and department heads take turns being chairman. ~ice Mayor Asting suggested they adjourn. Councilman Rotundo so moved. Councilman Inman seconded the motion. Workshop was adjourned at 5:20 P.M. Minutes submitted by: Lura Sue Koser -4- Council Workshop Minutes September 18,.. 1986